The first judicial challenge to a U.S. Department of Health and Human Services directive regarding the State Children's Health Insurance Program (SCHIP) has been filed.
On Friday, April 4, Manatt, Phelps & Phillips, LLP, a national law and consulting firm, filed an amicus brief on behalf of more than 25 prominent health policy and child health experts in federal district court. The brief supports the position of the State of New Jersey.
The Centers for Medicare and Medicaid Services issued a policy directive in August 2007 that it claimed was directed at preventing health insurance "crowd-out" (when one form of health insurance is substituted for another).
The directive prohibits states from providing health coverage to uninsured children in families earning more than 250 percent of the federal poverty level ($42,925 for a family of three) unless states can prove that they have enrolled 95 percent of children at or below 200 percent of the poverty level. States also would have to demonstrate that private health insurance enrollment had not declined more than 2 percentage points among SCHIP-eligible children in the last five years.
The directive specifies that even if states can meet these requirements, they wouldn't be able to enroll children who previously had private health coverage in SCHIP for 12 months. Moreover, during that time, period, those children wouldn't have access to health insurance.
"(T)he harsh strategies mandated in the directive - which are utterly disconnected from research and experience relating to crowd-out and which are poorly designed to actually reduce crowd-out - would ... significantly increase the number of children who lack health coverage," the brief stated. "In short, the specific strategies imposed by the directive threaten the primary statutory objective of SCHIP - to provide coverage to low income uninsured children and thereby increase children's access to health care - without any evidence that they would effectively advance the policy goals stated in the directive."
The brief argues that the 95 percent enrollment standard is unattainable and therefore will act as a de facto bar to coverage; that references to private insurance coverage levels, which are largely beyond state control, are arbitrary when viewed against the directive's stated purpose; and that the 12-month waiting period mandated by the directive will have substantial adverse health effects on the nation's youth.
"These new requirements represent a fundamental threat to the health of children," said Sara Rosenbaum, Hirsh Professor of Health Law and Policy at the George Washington University School of Public Health and Health Services in Washington, D.C. and one of the brief's signers. "This brief underscores how irrational the standards would have been shown to be, had the directive been published as a proposed rule as required by law."
The State of New Jersey filed a lawsuit on October 1, 2007 challenging the validity of the directive on procedural and substantive grounds and claiming that among other things, the federal government's failure to provide a public notice and comment period before issuing such significant policy changes violates the law.